Which revenues are exempt from value-added tax?
October 16, 2023 | 40,00 EUR | answered by Lina Sauer
Dear Tax Consultant,
I am reaching out to you as a business owner operating in the services sector, and I need to deal with the topic of value-added tax. I am unsure which revenues in my business environment are considered tax-exempt and which are not.
So far, I have mainly provided services subject to standard taxation. However, I am now considering offering tax-exempt activities to expand my customer base and take advantage of potential tax benefits. However, I lack the necessary knowledge to assess which revenues fall under tax-exempt status.
I am concerned that I may make mistakes in the calculation of value-added tax, leading to legal consequences or financial losses. Therefore, I want to ensure that I am acting correctly and would like to know from you specifically which revenues are considered tax-exempt.
Could you please explain in detail which criteria must be met for a service or product to be considered tax-exempt? Are there any exceptions or special considerations I should be aware of? How can I ensure that I correctly invoice my revenues while taking into account tax-exempt status?
Thank you in advance for your help and support.
Sincerely,
Leon Stricker
Dear Mr. Stricker,
Thank you for your inquiry regarding the tax exemption of services in your company. It is understandable that you may feel uncertain about this matter and want to ensure that you comply with all tax regulations correctly.
In general, services can be both subject to sales tax and exempt from sales tax. The tax exemption of services is primarily governed by the Value Added Tax Act. In order for a service to qualify as exempt from sales tax, certain criteria must be met. Generally, exempt services are listed in § 4 UStG.
Some examples of exempt services include:
- Medical treatments in the field of human medicine and dentistry
- Educational services provided by recognized educational institutions
- Social services and care services
- Cultural and sports events
- Sales within the scope of public institutions
It is important to note that there are also exceptions and specific rules that may apply depending on the type of service. An example of this is the small business regulation according to § 19 UStG, where companies with an annual turnover below 22,000 euros are exempt from sales tax.
To ensure that you correctly invoice your sales and take into account the tax exemption, I recommend that you consult with a tax advisor. A tax advisor can provide you with personalized advice and help you properly classify your sales and comply with all tax regulations.
I hope that this information is helpful to you and I am at your disposal if you have any further questions. Thank you for your trust and your inquiry.
Sincerely,
Lina Sauer
